How to pay off debt fast

This user-friendly guide will help you attain a debt-free life. (iStock)

No one sets out with a goal of accumulating debt, but that doesn’t change the fact that personal debt in the United States is at an all-time high. Adults in the U.S.aged 18 and older report having an average of $29,800 in personal debt, excluding home mortgages, according to Northwestern Mutual's 2019 Planning & Progress Study. The survey also found that 15 percent of Americans believe they'll be in debt for the rest of their lives.

Ready for the good news? With the right strategy, you can dig yourself out of debt—quickly. Here’s how.

Set a budget

Although 93 percent of Americans recently surveyed by said they believe everyone needs a budget, one-third of respondents admitted they don’t have one.


Creating a budget, though, has never been easier thanks to technological advances. Many banks and credit unions offer budgeting tools to their customers. In addition, free budgeting website like or enable you to track your spending across all of your financial accounts.

Curb your spending

Once you have a clear picture of where your money is going, you can create a plan to reduce the discretionary expenses—dining out, shopping, travel, cable TV, or other categories—that are eating into your income and making it difficult for you to crawl out of debt. Freeing up cash will give you more money to pay off your debts.

Choose the right payoff method for you

The average U.S. household has approximately $6,849 in revolving debt—that’s debt carried over from one month to the next—costing an average of $1,162 in annual interest, according to NerdWallet’s 2019 American Household Credit Card Debt Study. If you’re in that boat, you’ll have to create a plan for how you’re going to attack your credit card debt.

Some people focus on paying off their higher-interest debt first, which makes sense financially, since it can lower significantly how much you’re paying in interest. Other folks, meanwhile, start chipping away at their credit by targeting the smallest debt first to gain momentum that will propel them to keep paying off their debts. Pick the tactic that will work best for you, and halt your credit card spending—it’ll make eliminating your credit card debt easier.

Get professional help if you need it

If your debt is spiraling out of control despite your best efforts, consider working with a professional debt counselor who can help you devise a plan to pay off your debts. Most debt counseling agencies charge fees for their services, but there also are a number of nonprofits that offer debt education and money management advice for free.


One warning: steer clear of debt settlement companies that charge up-front fees in return for promising to settle your debts.

Don’t make these mistakes

Unfortunately, a number of people make bad money decisions on their journey to a debt-free life. These three common missteps can set you back:

  1. Taking out a home equity loan. Tapping into the equity you’ve built in your house by obtaining a home equity loan or line of credit may allow you to pay off your existing debts in one lump sum, but a home equity loan still requires you to borrow cash that you’ll have to pay back—keeping you in debt.  
  2. Dipping into your retirement accounts. Borrowing from your IRA or 401(k) to pay off debts is a bad idea for two reasons: It can force you to delay your retirement, and if you borrow from either plan before age 59½, you’ll get hit with a 10 percent excise tax on the amount you withdraw, in addition to the regular income tax you have to pay on withdrawals from an IRA or 401(k) plan.
  3. Falling for a debt relief scam. The debt relief industry is rife with scams. One way to protect yourself from becoming a victim could be deciding to work with a debt counseling agency. American Consumer Credit Counseling and the National Foundation for Credit Counseling are two non-profit groups that can connect you with a reputable credit counselor.